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‘An unparalleled opportunity’: experts on digital ID’s potential to unlock fintech in government

Panel (clockwise from top left): Kendrick Lee, Siobhan Benita (moderator), Keyzom Ngodup Massally and Pirthipal Singh

Governments are keen to spur innovation in fintech, both in terms of encouraging private sector investment and themselves adopting fintech solutions to improve public policy delivery. Ian Hall reports on a webinar that explored how digital identity initiatives can underpin – and bring momentum to – the journey

As society and public authorities’ operations become more digital, and fintech solutions gain prominence and popularity, digital identity (ID) programmes are taking on growing importance.

Governments are moving at different speeds and considering different approaches. In Canada the government on the cusp of launching a public consultation on a digital ID framework for federal public services. Singapore is among the world’s pioneers in terms of government-led digital ID provision, with a well-established ‘Singpass’ scheme managed by the Government Technology Agency (GovTech).

To explore this increasingly important policy nexus Global Government Fintech convened an international panel to ask ‘Government fintech adoption: what role for digital ID?’ on 6 September 2022.

The webinar, organised in partnership with sister title Global Government Forum, featured: Pirthipal Singh, executive director for digital ID in the Treasury Board of Canada Secretariat; Kendrick Lee, director of the national digital ID programme at Singapore’s GovTech; and – providing a perspective focused on the developing world – Keyzom Ngodup Massally, head of digital programmes in the United Nations Development Programme (UNDP)’s chief digital office.

Digital IDs’ use in areas including facilitating government social payments and tackling anti-money laundering (AML), as well as the importance of international collaboration, were among many topics considered.

RELATED ARTICLE ‘Eight countries set out principles for the future of digital ID’ – a news story (28 February 2022) on a report from the Digital Government Exchange (DGX) Digital Identity Working Group (the countries are Australia, Canada, Finland, Israel, New Zealand, Singapore, Netherlands and UK)

Canada looks to ‘digital credentials’

Singh began by explaining that Canada is working towards agreeing a national approach, saying that “there’s really no appetite” for digital ID “as it is traditionally known”.

The country has three territories and 10 provinces that issue different documents that serve as ID documents – a different way of doing things to some other nations’ central government-led approaches.

But Canada’s public consultation on a digital ID framework for federal public services on the way indicates change is on the way.

“The model we’re looking at increasingly is the concept of digital credentials, which mirrors how things work today,” Singh explained.

Digital credentials are the electronic equivalent of physical documents. Any national approach would not be mandatory for people nor organisations, he said. “We recognise that some individuals and businesses in Canada may not want to use such a system and so we need to continue to maintain our paper-based systems,” he added, emphasising how any system would avoid what he referred to as a “central storage” approach.

The government, he said, wanted to have “meaningful engagement with Canadians” through the consultation.

International collaboration is also important. “We’re doing lots of work with other countries,” Singh added, mentioning Singapore, the UK and European Commission as among the other jurisdictions with which Canada’s public servants are liaising as they piece their way through the digital ID (credentials) jigsaw.

RELATED ARTICLE Canada and EU look to end ‘Wild West’ atmosphere of digital credentials – our news story (1 Dec 2021) on Canada’s government and the Commission announcing a partnership to examine the use of digital credentials

Singapore’s Singpass progress

Lee acknowledged the significant structural differences between Canada and Singapore’s governance. “In Singapore we have just one level of government,” he said. “We’re also fortunate that we have a foundational legal identity, which in a way we have sort of digitalised to create a digital identity.”

Singpass has evolved from its origins in 2003 as username and password with which people could transact with government to a digital ID system also supporting private-sector transactions (since 2018). It has been adopted by 97 per cent of eligible users.

Given Singapore’s relative leadership in terms of digital ID, Lee was able to provide examples of how Singpass supports fintech (or, in his words, the “transformation of financial services with technology”).

As a first example he said that Singpass had helped with customer authentication during the opening of bank accounts: for example enabling auto-filling of applicants’ details. “In some cases, provisioning is instant, which means you get your credit card (the digital version) instantly before the physical one comes in the mail several days later,” he said.

As a second example he raised ‘open banking’, specifically SGFinDex: a joint-initiative by the Monetary Authority of Singapore and the Smart Nation and Digital Government Group, with the support of the Ministry of Manpower, that combines national digital ID and a centrally managed online consent system to enable individuals to access, through apps, their financial information held across government agencies and the private sector. “It means that I can access my personal balance-sheet across all the major financial institutions and the government pension fund on one pane of glass,” Lee said.

In the corporate domain, he mentioned ‘Myinfo business’ – a service that, he said, could be extended to support ESG disclosure (data relating to an organisation’s environmental, social, and governance performance) in support of ‘green finance’.

“Ultimately, we are working to provide a platform in our digital infrastructure that enables the flow of data across systems, organisations and potentially across country boundaries,” he said, describing the international angle as the “next stage”.

The UK-Singapore ‘Digital Economy Agreement’, signed three months ago, includes a commitment to delivering greater compatibility and interoperability between digital ID systems.

UNDP’s digital public infrastructure approach

Ngodup Massally kicked off her opening remarks by describing the confluence of digital ID and fintech innovation as “extremely important” to the United Nations (UN).

“It’s important because it’s estimated that there are millions of people who do not possess proof of legal identity, and thus cannot prove who they are to receive social cash transfer benefits, or to improve their livelihoods or utilise services that are available or could be made more available to them,” she explained.

There are estimated to be about 166 million children under five worldwide whose births are not registered, creating fundamental ID challenges for some of the world’s most vulnerable people. “Without these foundations, it can lead to lack of access to public services and exclusion from large parts of the economy, as well as the inability to exercise political rights. Or to exercise the right to protect your data. And therefore there’s risk of exploitation, especially if you are a refugee,” Ngodup Massally said.

The UN Sustainable Development Goals (SDGs) include the target of providing legal identity for all, including birth registration, by 2030 (target 16.9).

The UNDP is, Ngodup Massally said, supporting this vision by helping nations to build digital public infrastructure for identity using ‘open source’ technologies that, she said, can “speed up implementation because countries can re-use available code or solutions from other countries… customising to their own contexts.”

The ‘digital public goods approach’ also “increases robustness because infrastructure is a moving piece”. She explained: “Infrastructure consistently needs to improve and be responsive, and as a digital public good there are communities of developers, communities of governance that constantly improve them and share lessons on implementation.”

Ngodup Massally also referenced the importance of ‘digital sovereignty’, saying that “countries can have ownership of their source code [and] reduce risk of vendor lock-ins”.

India is among the nations to have made impressive progress, she said. “Without digital public infrastructure and [digital] identity, [the rate of] financial inclusion that India has of 80 per cent would have taken 46 years to complete, as opposed to the six years that it has taken,” she said.

RELATED ARTICLE ‘India opens up payments and digital ID ‘global repository’ – our news story (19 July 2022) on India’s government making its payments and digital ID technology available to all countries via open application programming interfaces (APIs) under the country’s ‘India Stack’ initiative

Facilitating fintech innovation

There are “so many” ways that having digital ID helps fintech solutions, Ngodup Massally said, providing examples including governments’ disbursement of social payments.

“It’s the ability to self-identify who you are, and therefore what benefits you are entitled to,” she said. “But going beyond – and this is where the fintech innovation really comes in – is the ability to receive that money in a way that’s linked to [the recipient’s] identity in a bank account, or in a payments account, so that this woman or this man or smallholder farmer has a way to save their money, use it to pay digitally for local services, pay school fees as they get start getting digitised in a number of areas.”

Her overall point was the importance of digital public infrastructure. “The reason why digital public infrastructure is so important in the context of fintech innovation is because the public rails of the infrastructure really enable the private sector, social enterprises and other stakeholders to innovate on top of the common rails that support greater interoperability, greater protection of people and their rights to data,” she said.

From his perspective in Singapore, Lee said that the answer to the webinar’s question “essentially boils down to” anti-money laundering and combatting the financing of terrorism” (AML/CFT). “I think digital ID solves mainly, initially, the KYC [know-your-customer] problem – making that more efficient, making that faster. And subsequently, if it’s a reusable digital ID, then ongoing authentication of the user,” he said.

He focused on the Singpass story to date. “We’ve been fortunate because in Singapore the regulator has said: ‘Look, if you use Singpass for KYC, then it satisfies CDD [customer due diligence]’. And that’s really enabled almost any area of consumer finance to use this as a much more efficient way of customer onboarding.”

He explained that Singpass’s use has evolved beyond everyday deposit- and credit-banking to include remittances – particularly useful in a nation, such as Singapore, with a large migrant workforce. “It simplifies the transfer of funds back home, which is a very good inclusion use case,” he said. “Of course, it also helps with digital wallets for travel. If you think about the more new-fangled products around digital assets, it supports those as well. So, I think if you can solve the AML, CFT and CDD problem, then essentially the sky’s the limit. There’s really no fintech problem that you can’t solve with digital ID.”

‘Unparalleled opportunity’ ahead

Singh described how digital credentials have the potential to speed up interactions, as well as making things easier for smaller companies that could lack facilities to interact with customers in person. Such benefits, he said, apply as much to ‘medtech’ and “almost any small organisations that want to change the status quo” as they do to fintech providers (he made a similar point as regards trust, saying that small- and medium-sized enterprises “usually have a much harder time to establish trust” than larger enterprises, and digital credentials could also be helpful here).

Lee described three digital ID considerations for every country: utility, trust and inclusion.

“It’s about prioritising sectors or use cases, so that we build confidence and there’s widespread adoption,” he said, in respect of utility. “With Singpass we started with government, we moved to FIs [financial institutions], people asserted that this is a better way of doing things and they’re willing to try it in other sectors of the economy.”

In terms of trust, the government-led solution created in Singapore may not necessarily be the best route in nations where trust in government is lower, he said. For inclusion, he said it was important to ensure ways are found to involve people who want to “opt out”.

UNDP’s Ngodup Massally’s focus is on the 77th session of the UN General Assembly, which is from 13-27 September, and her theme of digital public goods. “UNDP, along with a number of member states, are working together to highlight very pioneering initiatives – including, of course, from countries like Singapore – and lobbying together to bring in [a] new era of digital co-operation to build safe, trusted and inclusive digital public infrastructure,” she said.

She described an “unparalleled opportunity” to build the “next generation of ID systems putting people and privacy at the centre”, as enshrined in 10 ‘principles on identification with sustainable development’ endorsed by the UNDP alongside multiple other organisations.

Fintech-related benefits then await. “We’ve seen many instances where countries will have 10 to 15 different ID systems in place,” Ngodup Massally said. It is important, she emphasised, to focus “not [on] centralis[ing] power, but to build systems that put people and their privacy at the centre of how these systems function, how they interoperate and thereby become the public rails on which different fintech innovations happen.”

The discussion was proof of this, as exemplified by Canada’s route down a different track to Singapore’s. But as fintech’s emergence continues, how nations develop their approach to digital ID – and how they interact – has become an increasingly significant journey.


Watch the webinar, which was held on 6 September 2022, in full (1hr 14min 37sec) =>

Source: Global Government Forum YouTube page


Global Government Fintech’s ID Verification section and our sister title Global Government Forum’s Digital Identity section